Aon: Insurers could withdraw flood cover

Insurers could remove flood cover in more areas of the UK if the government does not start investing in adequate flood defences rapidl, according to Aon.

The company is warning property owners that they could become more exposed to recovery costs as high risk, uninsurable regions become more widespread following an inevitable reassessment by insurers of their role in dealing with flood claims.

The warning comes as the Association of British Insurers expects to pay £3 billion for flood claims from the latest series of disasters, while the government has only committed to spending £800 million on long term protection.

Bill Gloyn, chairman of European real estate at Aon said: "Recent public concern on flooding has focused on climate change and rising sea levels. We now have tragic evidence that a few token sandbags are no more likely to hold back the Thames in full flow than they will the might of the North Sea. The government must face up to its responsibility to protect the expanding areas of high flood risk, many of which have resulted from lax planning controls in the past. We know that Tewksbury and Upton-on-Severn are prone to flood yet they suffer regularly.

Gloyn said that the alternative would have to be a state supported insurance pool to handle claims, as it did for terrorism. Without that, the lack of insurance would cause widespread breaches of commercial contractual obligations for banks, landlords and tenants.

Gloyn added: "Property owners must be prepared for insurers removing flood cover in their region in response to this heightened risk. The insurance market cannot be realistically expected to continue to bear the burden of years of government failure to invest adequately. Owners can obviously take action to improve the resilience of buildings, such as moving electric supplies off the ground and storing valuable property on upper floors. But ultimately these individual measures will provide minimal protection in comparison to a sophisticated flood defence infrastructure that can only be set up by the government."